4 Resources That May Help Increase 401(k) Savings
There are many ways investors can increase 401(k) savings ‒ from maxing out yearly contribution limits to rebalancing account allocations at least 4 times a year.
However, one of the best ways to increase retirement savings is one that is often overlooked by many investors: gaining the necessary education and becoming proactive about retirement savings.
Keep reading for 4 things you can do that may help increase 401(k) savings.
#1 Know How to Read a 401(k) Statement
Many investors approach their 401(k)s with a set-it-and-forget-it strategy. Rather than managing their 401(k)s, too many people hope they’ll have enough saved for retirement.
When a statement arrives, many fail to take the time to review it.
While reviewing a 401(k) statement might not be the most exciting read, it is important that you have a good understanding of the information that is provided to you.
Opening and reviewing your statements also helps you determine whether or not you’re on track to meet your financial goals.
Understanding what’s in your 401(k) statement isn’t difficult. It simply requires you to spend time educating yourself.
Watch the video below to see how to read and understand a 401(k) statement.
#2 Take Advantage of Our Free Online Resources
If you really want to increase 401(k) savings, one of the best things you can do is to be engaged with your investments.
For many, a 401(k) is the largest asset come retirement. So why leave your financial future to chance or assume that your employer is taking care of your 401(k) for you? (Hopefully, you are aware your employer cannot manage or make changes for you!)
When you gain the necessary knowledge, you may go from being a disconnected investor to one who is engaged with your 401(k) savings and the overall health and well-being of your financial future.
And that means you are in control.
There are numerous free online resources available to 401(k) investors – all you need to do is dedicate a bit of time and energy to your education.
401(k) Maneuver is committed to providing you information that will help you become a better 401(k) investor. Check out these free retirement saving resources:
Watch our 401(k) Masterclass video In as little as 13 minutes, you will discover 3 strategies that may supercharge your 401(k) performance.
Subscribe to our YouTube channel and get notified every time we post a new video with tips on how to maximize your retirement savings or on important changes that may impact your 401(k).
Subscribe to the blog and get weekly email roundups on the latest 401(k) news and tips on how you can become a better investor.
#3 Roll Over Old 401(k)s
If you have recently changed to a new employer or you left that job years ago, it’s likely you have some 401(k) retirement savings that accumulated at your former job.
Don’t assume your past employer is taking care of the 401(k) you left behind. This is a belief many 401(k) investors have – and it’s one that may potentially lead to less retirement income and prevent you from reaching your retirement income goals.
If you leave a 401(k) behind with a past employer, it is not their responsibility to take care of it for you.
In fact, they cannot because it’s your money. It’s your responsibility.
While you may be able to leave your 401(k) account with your previous employer, there are several disadvantages to doing so:
- Your account will remain subject to plan rules.
- You will continue to have limited investment options.
- You will have another account to keep up with.
And leaving it behind may result in overlapping funds that may not suit your tolerance for risk.
Regardless of how much your 401(k) balance is, it’s important for your financial future to decide on what you’re going to do with it moving forward.
Namely, do you leave it where it is, or do you roll over your account to your new employer’s 401(k) plan or to an Individual Retirement Account (IRA)?
There are potential advantages to rolling over your old 401(k) into an IRA:
- You can consolidate more than one 401(k) account into an IRA.
- With the right advisor, you have virtually unlimited investment options and more control over the account.
- Tax withholding is not required if you need a distribution.
- You have more control over naming or changing your beneficiaries.
Before you make a decision on what to do, it’s important to know the irreversible and costly 401(k) rollover mistakes. Check out our 5 Costly 401(k) Rollover Pitfalls guide.
#4 Seek Expert Help Sooner Rather Than Later
Getting expert help with investing and allocating your 401(k) could potentially change the performance of your account from good to great and increase 401(k) savings.
Studies show that working with a financial advisor may increase your retirement income and may greatly impact the type of retirement lifestyle you can afford.
In a 2019 study titled Advisor’s Alpha, The Vanguard Fund Group, Inc., reported a 3% average increase in the value of portfolios of clients who work with a good financial advisor.¹
This return, the study states, depends on the client’s situation and will vary from year to year.
Morningstar’s David Blanchet, Head of Retirement, CFP, CFA, published a 2014 study titled The Impact of Expert Guidance on Participant Savings and Investment Behaviors.
The report revealed that participants who received expert guidance had as much as 40% more income during retirement versus those who received no help at all.²
Use our calculator to see how professional account management may improve your 401(k) account performance.
If you don’t think you have enough money saved or you think you’re too close to or too far away from retirement, don’t let that stop you.
If you’re still on the fence about seeking help, think of it this way…
If you were building a new home, you wouldn’t try to wire it yourself, would you? Unless you’re a licensed electrician, we hope you wouldn’t! You’d call in a professional to do it right.
If you broke your arm, you wouldn’t cast your own arm. Instead, you’d find a specialist to do it for you.
The same applies to your retirement savings. Why would you leave your largest asset to chance when you could seek expert third-party advice?
Check out our no-cost guide on The Different Types of Licenses Financial Advisors Have and What They Mean to You
- David Blanchet, Head of Retirement, CFP, CFA, Morningstar 2014, “The Impact of Expert Guidance on Participant Savings and Investment Behaviors”